Gce Model Questions Vol1 2021 Financial Accounting Question 28

A local authority's original budget for the year shows: Current revenue - Tax £15,000,000, Grants £3,000,000, Other income £500,000; Current expenditure - Salaries £8,000,000, Maintenance £2,500,000, Interest £1,200,000, Other expenses £1,300,000; Capital receipts - Sale of assets £1,200,000, Borrowing £4,000,000; Capital expenditure - New building £5,500,000, Infrastructure £2,000,000. During the year the following adjustments are discovered: (i) Interest expense was understated by £200,000; (ii) A £300,000 grant was actually a capital grant and should be moved to capital receipts; (iii) £500,000 was transferred from capital to current expenditure to cover a shortfall. Compute (a) the corrected current‑budget surplus (or deficit); (b) the corrected overall budget balance (including capital); (c) the net borrowing requirement after all adjustments.